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How Much Does It Cost to Start a General Contractor Business?

You can spend as much as $125,000 to start a general contractor business without having the needed equipment (you can rent or lease some of the equipment you need).

But of course, we know that certain factors can influence how much you will spend to start a standard general contractor business

A general contractor business is a profitable business to start especially in places where the real estate and construction industry is thriving. A general contractor is a professional responsible for overseeing construction projects from start to finish.

They manage all aspects of the project, including hiring subcontractors, obtaining permits, ordering materials, and coordinating schedules. General contractors ensure that the project is completed on time, within budget, and meets quality standards.

Factors That Influence the Cost of Opening a General Contractor Business

  1. Business Location

The truth is that the location of a business will determine how much you will spend on rent or lease, on acquiring licenses and permits, on utilities, and of course, on hiring labor and meeting certain obligations that are associated with locations.

  1. The Cost of Equipment, and Tools

A general contractor business typically requires tools and equipment to effectively manage and complete construction projects.

While general contractors may not use as many specialized tools as individual tradespeople, they still need basic tools for tasks such as measuring, cutting, fastening, and leveling.

Apart from the simple tools listed above, you should also make provisions for equipment such as ladders, scaffolding, hand trucks, and power tools for various construction activities.

  1. The Cost of Purchasing a Utility Truck (Vehicle)

Note that depending on the size and location of your general contractor business, you may need a dedicated utility truck for transporting your workers, equipment, and supplies to and from construction sites.

It is important to note that the cost of a suitable utility truck will depend on your preferences and also your decision to settle for outright purchase or lease.

Note that the business vehicles for your general contractor business can also include company cars, commercial trucks, and vans.

  1. The Cost of Training and Certifications

If you are looking to start a general contractor business, you should budget for training and certifications such as Occupational Safety and Health Administration (OSHA) certifications for workplace safety, construction management courses to develop project management skills, and trade-specific certifications from organizations like the National Association of Home Builders (NAHB) or the Associated General Contractors of America (AGC).

These certifications not only enhance your skills and credibility but also demonstrate your commitment to professionalism, safety, and quality in the construction industry, which can attract clients and help your business thrive.

  1. The Cost of Licensing and Permits

You cannot legally start and operate a general contractor business without first obtaining the specific licenses and permits needed to start the business.

You should make plans to obtain a business license, general contractor license, trade name registration, employer identification number (EIN), building permit, environmental permit, health department permit, signage permit, hazardous materials permit (if applicable in your city), fire department permit, and zoning permit et al.

In case you are not sure of the required licensing permits to start a general contractor business in your city, you should check with your local government or regulatory agencies.

  1. The Cost of Insurance Policy Cover

As a general contractor business owner, it is expected that you go to construction sites to work, and in some cases, you will be required to climb buildings.

This can be risky hence it is required that a general contractor business purchase the required insurance policy cover for the business.

Other risks that general contractors or building technicians are exposed to include the risks associated with handling equipment, fire, driving to and from project sites, exposure to chemicals, and loss and damage to your equipment, tools, and facility.

Please note that the cost of insurance policy coverage will depend on factors such as the size of your business and the coverage limits you choose.

  1. The Cost of Marketing and Advertising the General Contractor Business

Promoting your general contractor business through marketing and advertising efforts is essential to attract clients, and win contracts regularly.

Even though there are no specific costs attached to marketing and advertising a business, the bottom line is that if you want to launch a business that will win a fair share of the available market share in your location, then you must be ready to invest a significant amount to promote your business.

  1. Operational and Miscellaneous Expenses

For a general contractor business, you should make plans to spend on operational, and miscellaneous expenses such as rent for office or storage space for your supplies and equipment, utilities, fueling, maintenance, office supplies, taxes, accounting software or services, and any other financial management needs or any additional employees you may hire when you have a project that requires additional workforce to complete within the stipulated time frame.